Diminishing marginal returns and diminishing interest in left-wing parties

"Stairs for go down" by ksbuehler is licensed under CC BY-NC-SA 2.0

Economic Models: from theory to application n.2

Diminishing marginal returns is a concept of paramount importance in economics. Defined as an increasing disinterest in anything, diminishing marginal returns are found in most economic fields, representing the mere nature of human beings when it comes to making a choice.

For many years, the welfare state has been the main selling point of the Left. Defending a redistribution of income through taxation and financial aid in order to make society safer and better, the welfare state is criticised by some economic schools as being an intrusive intervention of the state into the private matters of economic agents.

Support for or against political parties defending the welfare state might appear to depend upon which economic school one believes in, or upon one’s ethics and moral beliefs. Perhaps, however, the interest in defending the worse-off members of our society is also prone to diminishing returns.

Europe saw welfare states flourish in the 20th century, with many European countries putting social security programmes in place. The European Union itself promotes many financial aids and other safety nets to ensure the protection and well-being of its citizens, but this interest has diminished over time. Is this the result of diminishing marginal returns?

What are diminishing marginal returns?

“Diminishing marginal returns” are three words which read like they shouldn’t be together. One could define diminishing marginal returns in a technical manner, explaining concavity of weird economic functions and employing many obscure terms; but instead, let’s spare ourselves from a collective headache and leave this mathematical nonsense on the side to focus on the intuition behind this concept.